QAD Precision News Round-Up: 15 October 2021

In the QAD Precision News Round-Up: 15 October 2021, IMF cuts global growth forecast; US opens north and south land borders; China trade surplus with US hits monthly record; Delta reports cargo revenue increase; plus managing peak season chaos and more. 

Global Trade

IMF CUTS GLOBAL GROWTH FORECAST 

The International Monetary Fund (IMF) cut its global growth forecast for 2021, however, it predicts reasonable growth over the medium term. 

On Tuesday, the IMF said it estimates global gross domestic product to expand by 5.9 percent this year. This outlook is 0.1 percent lower than its July prediction. Nonetheless, the fund has kept its global growth projection for 2022 at 4.9 percent. 

The revised forecast comes amid supply chain disruptions as well as the deteriorating health situations in emerging economies. In particular, the IMF expressed concerns about the different rates of recovery in advanced and emerging economies. According to its estimates, advanced economies could surpass their pre-pandemic levels in 2024. However, the IMF also warned that developing countries, excluding China, could stay 5.5 percent below their pre-pandemic forecast. For more information, please see CNBC.  

US OPENING MEXICAN AND CANADIAN LAND BORDERS TO TRAVELERS

This week, the United States announced that it will open land borders to non-essential travel next month. This announcement ends a 19-month closure along both the Mexican and Canadian borders. As a result, travel will open in early November for fully-vaccinated foreign nationals to enter the US. Travel is currently limited primarily to workers with essential jobs, such as truck drivers. 

Canada has allowed fully vaccinated US citizens to enter since August, while Mexico has had no restrictions. Travelers entering the US by rail, sea, or land must disclose their vaccination status, but are not required to provide a negative Covid test. Furthermore, by mid-January, the US will require even essential workers to be fully vaccinated prior to entry. Covid cases in the US, Canada, and Mexico continue to decline, encouraging fewer restrictions. For more details, please click here.

CHINA TRADE SURPLUS WITH US RISES TO MONTHLY RECORD

This week China reported that exports had risen, but that imports grew at a slower pace than expected. In US dollar terms, imports expanded 17.6 percent in September from a year ago to $240 billion. This result was 20 percent below estimates by analysts polled by Reuters. However, exports climbed 28.1 percent in September from a year earlier to $305.74 billion, exceeding the growth rate of 21 percent predicted by the Reuters poll. In September, China’s trade surplus with the US grew to a monthly record of $42 billion. For more details, please see CNBC.  

CUSTOMS ISSUE THREATENS US FISH SUPPLY

The supply of Alaskan pollock is in the middle of a customs dispute at the US-Canadian border. US Customs and Border Protection (CBP) alleges that the pollock supply chain violates the Jones Act. The act requires goods shipped between US ports be carried on US- owned ships. The pollock is caught in the US and then transported by ship to Canada. After this, the catch travels 100 feet by rail to be loaded onto trucks to cross the border back into the US. 

CBP has fined shippers $350 million in penalties. In protest, two shipping companies have filed a suit in federal court. As a result of the suit, 

26 million pounds of fish were left in Canadian storage. However, a judge issued an injunction on Sunday allowing the fish into the US. Pollock is in high demand as commercial processors are preparing for the Lenten season when many Christians forgo red meat in favor of seafood. Furthermore, pollock is in most fast food chain fish offerings, such as McDonald’s Filet-O-Fish. For more information, please click here.

Retail

IKEA EXPECTS PRODUCT SHORTAGES TO LAST UNTIL 2022

Swedish retailer Ikea has said that it expects product shortages and delays to last until the summer of 2022. The CEO of Ikea’s parent company, Inter Ikea, Abrahamsson Ring, said supply chain challenges had persisted longer than anticipated. According to Mr Ring, the shortages will remain for the majority of the company's financial year, which ends August 2022. In addition, experts believe that the global supply chain disruption will not improve before next year. For more details, please see Business Insider.  

Carriers 

DELTA REPORTS CARGO REVENUE INCREASE

Delta Air Lines has reported a 39 percent increase in cargo revenue to $262 million compared to 2019. This is despite the fact that Delta flew fewer than half its widebody fleet. Delta’s year-to-date cargo revenue increased by 28 percent to $728 million. The carrier is set to reach $1 billion by the end of the year, driven primarily by peak season shipping. 

Delta’s growth is partially from a focus on deploying passenger flights to areas that also have high cargo demand. The carrier’s gains also reflect an increase in shipping rates due to a decrease in capacity and inventory backlogs. As passenger travel increases, Delta estimates it will be back to the bulk of its capacity by summer 2022. For more information, please see Freight Waves.

QAD Precision News

PEAK SEASON CHAOS: HOW MULTI CARRIER SOFTWARE CAN HELP

This year has presented shippers with many challenges, from port congestion and worker shortages, to increased shipping costs and decreased capacity. These challenges, coupled with an increase in e-commerce, has led many shippers to look for solutions to both meet customer demand and control costs.

Peak season issues are nothing new to experienced shippers. Perhaps a cargo shipment is late, carrier capacity is tight, or even demand is outpacing supply? But all at once? Now that is new — but it is the reality facing many shippers as we head into peak season. In this QAD Precision Report we look at how multi carrier shipping software helps shippers manage delays and avoid surcharges. To read the full report, please click here.